A Bird in the Hand is worth 5 in the bush - An E-Commerce Narrative

Updated: Feb 28

In today’s digital landscape, with sundry new e-shops popping up on the dotcom every day, it is no longer a secret that product or cost differentiation alone can’t guarantee success. E-retailers today are going out of their way to make the overall pre-purchase experience exciting for their customers - investing in ornate advertising, offering various payment options, leveraging marketing across multiple channels and even offering free shipping and return incentives -- all of this in the hopes of capturing more market share and building long-term customer loyalty.

But are these efforts good enough to drive market growth?

“ The cost of customer acquisition (CAC) has now surpassed the average order value (AOV) of a customer, making it financially unsustainable for many such online stores.”

With low barriers to entry and skyrocketing customer acquisition costs, the e-commerce industry has all but managed to saturate itself in a fragmented manner. Every retailer today is trying to one-up their services to attract more customers, even if it comes at the cost of declining margins. Thanks to this hyper competitive state and slow-burning saturation, the cost of customer acquisition (CAC) has now surpassed the average order value (AOV) of a customer, making it financially unsustainable for many such online stores. What are retailers doing wrong then?

Well, our hunch would be that their focus on customer acquisition rather than customer retention is the linchpin of all problems.

Returns are arguably one of the most crucial aspects to retain a disappointed customer and are the most important ingredient for nurturing long-term customer loyalty.

Thanks to the economical return incentives that online retailers now provide, coupled with reasons such as wrong fit, it is no longer uncommon to see people returning 30% of the items they purchase online, as compared to just 8% return rate in physical stores, even if it were from their most-preferred brands. In fact, research suggests that 67% shoppers view the brand’s return policy before even making a purchase.

While most online retailers have taken this customer demand in stride, execution of the post-purchase return experience is a different story altogether!

Today, most retailers organize their return operations rather haphazardly, either through email / on-call customer service or by simply sending a return form and shipping labels with the order for the customer to fill up manually and send to a distribution centre. These processes can be very frustrating and time-consuming both for the customers as well as retailers, who also have to bear the additional economic burden of the shipping, sorting and re-allocation of items back into their inventories.

Moreover, as a result of these internal supply chain hold-ups, the customer’s refunds are often delayed or mixed up, and post-return customer service can be slow-moving and more often than not unavailable. This makes the overall return process unnecessarily complex for both parties and dampens the customers’ desire to buy from the brand again, no matter how good their product is, or how much the brand spent on acquiring that customer!

Now imagine, if the entire return process could be digitized, and customers could apply for and track the process of their returns or exchanges real-time, directly from your website, wouldn’t it make their experience much more simple and seamless?

"We created yayloh with this very aim in mind - digitalizing, automating the return process and allowing retailers to leverage return data to increase customers satisfaction."

Customer can see where their package is without having to connect with customer service or communicating cross-time zones via emails. Moreover, a faster return completion guarantees faster refunds, and increases the likelihood of customers shopping from the same brand. A smooth and error-free process would help build trust and customer retention which would in-turn bolster customer loyalty.

yayloh is here to help retailers maximise value for both the brand and the customers and be their strategic partner as they strive towards building long-term competitive advantage and sustainable customer loyalty.